Seoul-Headquartered Mirae Aset Management has come up with a new fund offer namely Mirae Asset Emerging Bluechip Fund, an open-ended equity fund. This is the fourth equity fund offering, the previous ones being Mirae Asset India Opportunities Fund, Mirae Asset Global Commodity Stocks and Mirae Asset China Advantage Fund. The Emerging Bluechip Fund will invest in Indian equities and equity-related securities of companies which are not part of the top 100 stocks by market capitalisation but have a market capitalisation of at least Rs 100 crore at the time of investment. The fund will not have any theme bias, but will invest in securities with the objective of generating income and long term capital appreciation. It will be benchmarked to the CNX Midcap Index and the fund will have a 65-100% allocation to equity and equity-related securities. It may also invest 0-35% in money market or debt instruments.
Cashing in on India growth story, the launch of this fund helps Mirae expand its product offering. Mirae Asset believes that on the back of high consumption, India has maintained an average 6%-plus GDP growth rate for a couple of decades. High domestic savings and demographic divide should support the growth momentum further in the coming years. The fund primarily aims to capture India growth and consumption story through this fund. According to the fund's managers, investments in the fund will give investors an opportunity to participate in the growth story of today's emerging companies which have the potential to become market leaders of the future.
The right proportion of mid-caps in the portfolio can help investors optimise their risk adjusted returns. The test of the fund manager will lie in identifying such mid-caps. The fund manager will use a new type of investment approach by combining thematic philosophy and bottom-up approach for stock selection. The fund manager believes that companies with strong balance sheets and good visibility in earnings will outperform given the earnings trajectory in mid-caps is very strong.
However, investors must note that though adding a mid-cap fund to your portfolio does help in diversifying your portfolio, the performance of the fund depends on a lot on stock picking skills of the fund manager and the overall performance of the stocks selected by the fund manager. Added to this, the timing in terms of entry and exit is critical and could decide the returns offered. Also typically, mid-cap stocks carry a higher risk, in the sense that they fall faster in a downturn. Also, some mid-cap stocks are illiquid and hence, take a beating. Therefore, it is important that the fund manager does not have any concentration.
The minimum investment amount is Rs 5,000 and there will be an exit load of 1%, if you redeem your units before a year. The NFO for Mirae Asset Emerging Bluechip Fund is currently open and will close on June 22, 2010. The fund will be managed by Gopal Agrawal and Neelesh Surana.
WHY TO INVEST:
To benefit from the emerging India growth story in mid-caps
WHY NOT TO INVEST:
Investing in mid-cap stocks is riskier than largecap stocks. By investing in this fund, one is betting on the mid-cap sector, that too specific to the stock picking skills of the fund manager and also on the performance of the mid-cap companies.
